Sanjeev Sanyal, principal economic advisor to the union finance ministry, on Tuesday called the current slump in the economy "a unique thing" in India's history and added that Goods and Services Tax (GST) must not be cut solely to stem the slowdown.

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In a conversation with CNBC-TV18's Shereen Bhan at the National Management Convention organised by AIMA, Sanyal said, "This time we are witnessing a "genuine demand-driven" slowdown. The government was initiating measures to address the growing concerns. However, the easiest place to initiate a "virtuous cycle" would be the monetary side."

Sanyal said, typically, a slowdown in India was a supply-side constraint problem, while this time it is a genuine demand-driven slowdown. "In a demand slowdown, we can do all the longer-term issues, improve efficiency and all of that but those are all supply-side things," he said.

"So, what do we do on the demand side? The two levers you typically have which are the faster levers are either fiscal or monetary. The point that has been made repeatedly is that there is clearly far more space on the monetary side than there is on the fiscal side," noted Sanyal.

First Published:Sept 17, 2019 8:03 PM IST